Bank runs were only part of the story this week.
And as the FinTech IPO Stock Index sank for another week, down 2.5%, the positive returns year to date are getting winnowed down. The index is up just under 7% since 2023 dawned.
Interest rates continue to get a boost from the Federal Reserve, which raised its benchmark rate by another quarter point. And amid the commentary on the macro picture, Fed Chair Jerome Powell noted, “Financial conditions seem to have tightened, and probably by more than the traditional indexes say.”
With a tightening of credit, companies that have already been grappling with macro pressures may see some bumpiness ahead. Recent earnings results underscore that nobody’s really out of the woods yet.
Tough Macro Pressures
Blend sank about 40% through the past five sessions. The downturn comes on the heels of earnings that showed the company’s Blend Platform segment revenue coming in at $29.5 million, down by $7.1 million, or about 19%. Mortgage market volume slid by 68% across the entire industry. With a bit more granular detail from the earnings results, the latest quarter’s Mortgage Banking revenue was $15.1 million, down by $14.0 million, or 48% year over year.
Those declines were only partly offset by Consumer Banking & Marketplace revenue, where that tally was $13.2 million, up by $6.9 million, or 109%. The company noted, too, that Title365 segment revenue was $13.3 million, down $31.2 million from the corresponding fourth quarter of 2021; or 70%, reflecting the increase in interest rates and the corresponding decrease in refinance transactions.
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Nima Ghamsari, head of Blend, said on the conference call with analysts that, “2022 was an extremely challenging year for our industry as we continue to see a sharp uptick in mortgage rates and margin compression for our customers. We have learned we’re not immune to the industry volume declines, which naturally impacted our financial performance.”
MoneyLion gave up 12.3%. As noted in this space, the online lender announced a renaming of its Even Financial platform, which will now be known as “Engine by MoneyLion.” Elsewhere, and as detailed in an interview with Karen Webster, Dee Choubey, CEO of MoneyLion, in discussing the company’s most recent earnings results, noted that digital ecosystems are being forged across platforms that serve as an intersection for consumers and businesses to educate themselves about finance, investing and saving.
“There’s a large swath of the U.S. population that finances themselves on a week-to-week basis,” he told Webster. MoneyLion has reported that total customer count increased 97% year over year to 6.5 million, representing 20% sequential growth (65% of sales come from consumers, 35% from enterprises).
Partnerships and Index Announcements
Shares in Upstart were off 7%. The company said that it has launched the Upstart Macro Index (UMI). UMI, per the company release, is designed to estimate how changing macroeconomic conditions, such as personal savings rate, inflation and unemployment, are impacting the credit performance of Upstart-powered loans.
Marqeta was 5.4% lower. In news this past week, the card issuing platform announced a new partnership with Australia-based Stables (formerly Tiiik) to power its new Mastercard prepaid card. Stables is a digital wallet that allows users to spend, send and earn stablecoins. Marqeta said in the announcement that through the partnership, Stables’ customers will be able to convert stablecoins into fiat and spend that fiat wherever Mastercard cards are accepted both online and in brick-and-mortar locations.
Oportun shares soared by nearly 47%, retracing at least some of the losses seen after its quarterly report, where we spotlighted the numbers here. As reported, revenues were up 35% in the December quarter to $262 million. The company’s financial presentation revealed that members in the quarter were 1.9 million, up about 27% year over year.
